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Author Question: Suppose a firm produces identical goods for two separate markets and practices third-degree price ... (Read 110 times)

iveyjurea

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on: Jul 1, 2018
Suppose a firm produces identical goods for two separate markets and practices third-degree price discrimination. In the first market the firm charges 30 per unit, and it charges 22 per unit in the second market.
 
  Which of the following represents the ratio of price elasticities of demand in the two markets? A) E2 = (21/29)E1
  B) E2 = (29/21)E1
  C) E2 = E1
  D) E2 = (22/30)E1
  E) none of these

Question 2

Trisha believes the production of a dress requires 4 labor hours and 2 machine hours to produce. If Trisha decides to operate in the short run, she must spend 500 to lease her business space.
 
  Also, a labor hour costs 15 and a machine hour costs 35. What is Trisha's cost of production as a function of dresses produced?


Jbrasil

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Reply #1 on: Jul 1, 2018
Answer to Question 1

E

Answer to Question 2

Since the production of a dress requires spending 60 for labor and 70 for machine hours, Trisha's cost function is: C(q) = 130q + 500.


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